Disclaimer: This article is for informational purposes only and does not constitute legal advice.
Detailed Answer
When an estate lacks sufficient cash or personal property to pay valid creditor claims, Colorado law allows the personal representative to sell estate assets. Below is a step-by-step guide under Colorado probate statutes.
1. Open a Probate Case
The estate’s executor or administrator (“personal representative”) must petition the probate court in the decedent’s county of residence to open a probate case. You serve notice and publish general notice to creditors under Section 15-12-801, C.R.S. (link).
2. Inventory and Appraise Estate Assets
Within 90 days of appointment, file an inventory that lists all real and personal property and their appraised values. If the total value of personal property (bank accounts, securities, household goods) covers creditor claims, you pay claims directly.
3. Determine Need to Sell Property
If the personal property is insufficient, the personal representative may petition to sell real estate or high-value personal property. Colorado Revised Statutes Section 15-12-806, C.R.S. (link) authorizes sale of real property to pay debts.
4. File a Petition to Sell Estate Property
Prepare and file a written petition with the probate court. The petition must:
- Identify the property (legal description for real estate or description of personal items).
- State the reason for sale (to pay creditors).
- Describe the proposed sale terms (public auction or private sale, minimum bid, sale date).
5. Court Hearing and Order
The court schedules a hearing and provides notice to interested parties. If the court finds the sale necessary and the terms fair, it issues an order authorizing the personal representative to sell the property under the specified terms.
6. Conduct the Sale
Follow the court order strictly. Hold a public auction or secure bids in a private sale. Keep detailed records of offers received and the final sale price. The personal representative must sell at or above the minimum price approved by the court.
7. Apply Proceeds to Creditor Claims
After the sale, deposit proceeds into the estate’s bank account and pay creditor claims in priority under Section 15-12-803, C.R.S. (link).
8. Close the Estate
Once all claims, taxes, and administrative expenses are paid, file a final accounting and petition for discharge of the personal representative. After court approval, distribute any remaining funds to the beneficiaries.
Helpful Hints
- Engage a probate attorney early to ensure compliance with court rules and deadlines.
- Obtain a professional appraisal for real estate to support the proposed sale price.
- Keep creditors informed: mail notices, publish in a local newspaper, and file affidavits of service.
- Document every step: file pleadings, keep sale records, and maintain clear accounting to avoid disputes.
- Check county court procedures—some courts require specific forms or additional notice periods.